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Great news: These two medical aid contributions are tax-free!

by , 08 August 2014
If your company contributes to medical aid schemes on behalf of your employees, you'll know very well about the tax consequences.

Medical aid contributions are taxable fringe benefits. And this means you must account for employee's tax correctly on your payroll. If you don't, you'll have SARS penalties coming your way.

But what you may not know is there are two medical aid contributions that are tax-free! This means you don't have to worry about tax when it comes to them.

Here are the two tax-free medical aid contributions you should know about.


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Two tax-free medical aid contributions you need to know about
 

Tax-free medical aid contribution: You pay the medical aid contributions of a retired employee (or his dependants after death), if he retired because of ill-health or other infirmary; and

Tax-free medical aid contribution: You pay the dependent's medical aid contributions if your employee dies. The medical aid contribution will be tax-free if the employee was under your employ at the time of his death.

There you have it. You don't have to worry about tax when it comes to these medical aid contributions – they're tax free.

There's just so much more to medical aid contributions. We've just scratched the surface.

From the 2015 tax year (March 2014 to February 2015), the way you deduct your medical expenses, including your medical aid contributions changed.

That's why we strongly recommend you check out the Practical Tax Loose Leaf Service. It'll show you how to implement the changes and treat medical expenses. And if you haven't applied the changes to your payroll, it also shows you how to fix it so you won't face tax SARS penalties! In addition, if you have any questions about medical aid contributions, ask our experts at the Accounting & Tax Club.

 



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